Correlation Between Singapore Telecommunicatio and China TowerLimited
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and China TowerLimited at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Singapore Telecommunicatio and China TowerLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Telecommunications Limited and China Tower, you can compare the effects of market volatilities on Singapore Telecommunicatio and China TowerLimited and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Singapore Telecommunicatio with a short position of China TowerLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and China TowerLimited.
Diversification Opportunities for Singapore Telecommunicatio and China TowerLimited
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Singapore and China is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and China Tower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China TowerLimited and Singapore Telecommunicatio is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Singapore Telecommunications Limited are associated (or correlated) with China TowerLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China TowerLimited has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and China TowerLimited go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and China TowerLimited
Assuming the 90 days horizon Singapore Telecommunications Limited is expected to under-perform the China TowerLimited. But the pink sheet apears to be less risky and, when comparing its historical volatility, Singapore Telecommunications Limited is 3.01 times less risky than China TowerLimited. The pink sheet trades about -0.31 of its potential returns per unit of risk. The China Tower is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13.00 in China Tower on August 30, 2024 and sell it today you would earn a total of 0.00 from holding China Tower or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Telecommunications L vs. China Tower
Performance |
| Timeline |
| Singapore Telecommunicatio |
| China TowerLimited |
Singapore Telecommunicatio and China TowerLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and China TowerLimited
The main advantage of trading using opposite Singapore Telecommunicatio and China TowerLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, China TowerLimited can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in China TowerLimited will offset losses from the drop in China TowerLimited's long position.| Singapore Telecommunicatio vs. Airtel Africa Plc | Singapore Telecommunicatio vs. KDDI Corp | Singapore Telecommunicatio vs. Amrica Mvil, SAB | Singapore Telecommunicatio vs. Turk Telekomunikasyon AS |
| China TowerLimited vs. Singapore Telecommunications Limited | China TowerLimited vs. Vodafone Group PLC | China TowerLimited vs. PT Indosat Tbk | China TowerLimited vs. KDDI Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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